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01 April 2023 - Year XXVII
Independent journal on economy and transport policy
06:28 GMT+2
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FORUM of Shipping
and Logistics


The Marine Insurance Markets in 2003

2003 a better year for marine insurance
2004 a critical year
 


Hull and machinery
A sector still fragile
Europe
The Cargo market
War risks
The P&I Clubs
2004: a critical year


Luckily only a few major marine disasters occurred in 2003. Some companies have voluntarily or not left the marine insurance market but the underwriting capacity has been maintained. Movements in rates varied according to the different specific sectors of the marine market. On the other hand, risk exposure increased especially in value. 
 

Hull and machinery: rate hikes continued

In our report on the marine insurance for the year 2002, we mentioned that the market had firmed up, namely there was a follow-up of rate increases and a more selective assessment of risks. This trend continued during the first half of 2003, but the premium increases were far more moderate in the second half and at the beginning of 2004. 

Fleets which showed good technical performances at the beginning of 2003 met with increases of about 10 % on their hull and machinery policies, but sometimes as much as 25 to 50 % for some whose results showed a loss ratio in excess of 100 %, or alternatively for fleets which were terminating a long term contract and for which rates had been contractually limited during the firming up of the market since 2000. 

To the surprise of most marine insurance players, the revisions applied during the second half of 2003 were much more restrained, with the 'good' clients often obtaining less than 5 % increases, and underperforming ones being renewed at about 25 % over last done. 

Overall the performance of marine insurers improved thanks to the rise in rates, cost cutting, re-insurance costs remaining relatively stable, a stricter underwriting policy and an absence of major disasters as experienced in the last quarter of 2002. In the international market, the number of companies and underwriters is far fewer than 10 years ago. The capacity is divided out differently between companies with some subscribing a higher proportion of the risks, whilst others are far more sensitive and circumspect, which naturally produces different underwriting results and policies amongst companies. 

Despite an improvement in profits in 2003, the losses on the previous exercises did not allow some players to take full advantage of the improvement in premium rates and claims-record of the current exercise. The higher rates have not compensated the chronic under-charging of the last 6 years and many insurers have doubtless under-estimated the necessary reserves for covering the commitments taken during the previous years. 

These elements have without any doubt weakened the impact of the higher rates on results.
  

A sector still fragile

The weak recovery of the financial markets since December 2002 has affected the level of endowments for provisions against fundamental depreciation, with repercussions on the balance sheet and net profits of insurers. 

In 2003 the rating agencies gave a fairly general marking down on the financial standing of insurance companies.  

The reasons for these re-evaluations were not exclusively found in the marine sector, but also in the other segments of the insurance market. 

Standard & Poor's lowered the rating of 207 insurers and re-insurers in the course of 2003, namely 28 % more than in the previous exercise. This trend is symptomatic of the extent of the declining confidence in the solvency, which is affecting the majority of actors now since eighteen months. 

The need for technical returns is a criterion for the whole profession, as it is now no longer possible to fall back on the financial profits to subsidise as a general rule the technical deficits - which is a practice carried out in most European markets during the second half of the 90's. 

In practice, it should be realised that it is as much the impressive increase in freight rates (mainly in bulk and oil seaborne trade) as the important depreciation of the dollar in relation to the euro, which has led to a significant increase in the insured value of ships (mostly insured in dollars). Capital which is necessary to insure these ships is therefore considerably higher, but only results in very small increases in the insurance premiums. The effect of any total losses would therefore have a bigger negative impact on marine insurers.
 

Europe: a market leader and in competition with the developing markets

Marine insurance has remained an 'euro-centric' industry as 60 % of world business is underwritten in Europe, 22 % in Asia, 14 % in North America, and 4 % in the rest of the world. 

France (1) is number two world-wide in hulls underwriting and acts as an alternative and competitor to the London and Norwegian markets, who hold the predominant positions as leaders in the coverage of the largest international owner's fleets. The French marine insurance market is dominated by AXA Corporate Solutions and AMA (Allianz Marine & Aviation), with Groupama Transport completing the trio.

(1) Japan is in second place world-wide in terms of marine premium income, but it does not play a predominant role in the global scene, as the Japanese insurance companies are above all concentrated on the national shipyards and owners. Nonetheless they have recently shown a growing interest in the European fleet.

South Korea (Samsung Fire & Marine, Korean Re), like Japan, has introduced a change in policy in 2003 in proposing terms, which are often very competitive to certain European owners, especially Greek. 

A close watch should be kept over the viability of Asian companies in their expansionist drive, bearing in mind their last attempts at international underwriting in the 80's ended up in failure.
 

The Cargo market

The Cargo market is customarily more local than Hull, with insurers throughout the world offering coverage to domestic clients either as a stand-alone Marine product or as an additional service line of business to industrial clients.  

In the current market, transparency is a key element, with full information being requested by insurers - often with little tolerance for inadequate answers - and increased premiums and / or deductibles for underperformance. 

Despite intense competition in this segment of marine insurance, most insurers have made substantial profit in 2003 and are still fighting for market share. Such attitude will sooner than later generate premium reductions and / or losses for insurers.
 

War risks

There is a popular view that war-risks insurance is a licence to print money. There have been relatively few high-profile marine losses apart from the 'Limburg' but premiums have risen quite a bit since the 11 September attacks.  

The nature of war-risks cover, however, makes it much harder to take a view on the fundamental profitability of this class of business. There are not so many traditional wars but more undeclared conflicts and at least the perception of a much higher terrorist threat.  

Although there are a run of regular losses from conflicts around the world and the occasional encounter between a ship and mines from either the second world war, the long running conflict in Sri Lanka or in other trouble spots.  

The biggest recent marine war-risks loss was not the terrorist attack that rendered the tanker 'Limburg' a constructive total loss, but a $125m claim arising from attacks on dredgers working in Indonesian waters.  

Carnival's latest cruiseship, the 2,620-passenger 'Queen Mary 2', will have war-risks cover equivalent to the $800m value of the hull. It will also have additional protection-and-indemnity war-risk cover of $400m on top.  

The Lloyd's underwriters who lead the P&I clubs war-risk programme are the same as those who write hull war risks so the aggregate risk on this single ship runs to $1.2bn, a figure that challenges the capacity of the war market.  

Marine war risks underwriters also write aviation and energy war risks so there is a single market in this class of business. A successful terrorist attack on such a ship would wipe out the total war-market's premium income for many years. 

War-risks cover has traditionally been limited to mobile property such as ships, aircraft and jack-up rigs that can flee a trouble-spot if necessary but there is now a limited market for cover for fixed objects such as offshore platforms and port installations.  

North Sea platforms generally have terrorist but not war cover, although some oil-and-gas installations in the Middle East have war cover.  

London war underwriters are planning to develop a new wording to match the recently introduced revision to the International Hull Clauses.  

The idea is to match the wordings so that risks excluded by the latter are given back in the same terms to avoid potential gaps and disputes. Revising the war clauses is, however, seen as a much simpler task than for the hull clauses.  

London also has a War Risks Rating Committee that publishes a tariff of minimum rates for both marine and aviation. However, these rates apply to cargo rather than ship or aircraft hulls.  

It should be noted that the French Marine Insurance market has pooled a significant underwriting capacity through the G.A.R.E.X. which is able to offer alternative coverage to the London market.
 

The P&I Clubs (Protection & Indemnity)

Since 1994/1995, members of the International Group of P&I Club have not seen a surplus. Nine of the 13 Clubs of the International Group announced a double-digit increase in rates in order to consolidate their reserves and to be able to face the growing trend towards catastrophes in the future. 

The Clubs are extremely conscious about the effect of a catastrophic disaster occurring to a large cruise ship or tanker, which would place their capacity (and that of their re-insurers) under pressure. There is a potential risk of conflict between the demand for capacity and the available supply on the insurance and re-insurance markets. 

The Athens Convention on passenger indemnity in the case of disaster is a serious cause of concern for the Clubs. Cruise ships only account for 1% of the world tonnage (dwt) but the owners and managers of the Clubs are preoccupied by the cost of claims which would result from a new 'Titanic' which would sink the capacity of clubs to underwrite all the other owners. 

These fears are reinforced with the coming into force of the Athens Convention protocol, which has increased the level of indemnity to 400 000 SDR ($ 570 000) per passenger. The whole market from now on living under the threat of a $ 1.75 billion disaster, if the largest cruiseship was lost with all the passengers on board.
 

2004: a critical year

Dans l'int'r't des armateurs, les assureurs doivent prouver qu'ils ont tir' les le'ons du pass' et analys' les raisons des pertes qui ont affect' lourdement leur industrie (6 milliards $ de pertes en 6 ans). La performance des compagnies et des P&I Clubs d'pend d'sormais de leur aptitude ' poursuivre plus avant une politique attentive de tarification et simultan'ment de s'lection accrue des risques, tout en consolidant leurs parts de march'.  

Contrairement ' l'ann'e 2003 durant laquelle peu d''v'nements majeurs se sont produits, l'ann'e 2004 semble d'buter plus difficilement avec notamment les sinistres ayant affect' le vraquier 'Rocknes' (18 morts) en Norv'ge et le navire de croisi're en construction en Allemagne 'Pride of America', d'une valeur de 380 millions $. 

La pr'servation de la ressource et des r'serves des assureurs maritimes constituera un facteur d'terminant dans leur capacit' ' faire face aux 'v'nements majeurs et ' r'pondre ' la demande. 

Les assur's - tant les armateurs que les industriels - ont besoin d'un march' stable et suffisamment profitable, faute de quoi l'assurance maritime ne sera plus en mesure d'attirer les capitaux n'cessaires, et les hausses excessives de primes constat'es au milieu des ann'es 90 risqueraient de se reproduire, ' un moment o' les marges de nos clients pourraient ' nouveau se r'duire ! 

For the sake of owners, insurers must show that they have learnt the lessons of the past and analysed the reasons for the losses, which have badly hit the industry. From now on the success of companies and P&I Clubs depends on their ability to take a keener interest in the setting of premiums and at the same time a more attentive selection to risks, while struggling for their market share.

Unlike 2003, when very few major events troubled the picture, the year 2004 seems to have started with bigger problems, as we have already had claims affecting the bulk carrier 'Rocknes' (18 killed) in Norway and the cruise ship under construction in Germany, the 'Pride of America', with a value of $380 million.

Being able to maintain their funding and reserves will be a critical factor for marine insurers in determining their capacity to handle major disasters and to respond to the market evolution.

Those insured - as much owners as industry - need to have a stable and sufficiently profitable market, without which marine insurance will not be able to attract the necessary capital, and the excessive increases in premiums which were seen in the 1990's, risks happening again, at a time when clients' profits could again get reduced.

Cap-Marine undertakes to find the best solutions
for its clients within the international market.
 



Shipping and Shipbuilding Markets in 2003

I N D E X

›››File
FROM THE HOME PAGE
After five consecutive quarters of growth, in the third quarter of 2022, freight traffic in EU ports fell by -0.7%
After five consecutive quarters of growth, in the third quarter of 2022, freight traffic in EU ports fell by -0.7%
Luxembourg
Particularly accentuated the decrease (-13.8%) of volumes in Italian ports
Assiterminal wonders : is there anyone who is ruling the distribution of the cold ironing plants in Italian ports?
Genoa
Ferrari : from the draft of the competition bill and from the analysis documents that turn around some perplexities
Attic records semi-annual and annual record revenue
Attic records semi-annual and annual record revenue
Pyreo
Decided resumption of passenger traffic
COSCO Shipping Holdings closes 2022 with record financial performance deteriorating in the last quarter
COSCO Shipping Holdings closes 2022 with record financial performance deteriorating in the last quarter
Shanghai
After 12 years of growth, containerized cargoes carried by the Chinese group's fleet of ships have decreased by -9.3%
Messina (Assshipowners) : the solution for the cold ironing must be the opening to the market
Rome
Calling for a "clear separation between those who will have to carry out the infrastructure, who will have to power it and who will have to keep it by offering the services to the ship"
Metrans (HHLA) acquires control of Croatian Adria Rail and builds a second intermodal terminal in Hungary
Metrans (HHLA) acquires control of Croatian Adria Rail and builds a second intermodal terminal in Hungary
Hamburg
Also obtained are the inland Serb terminal in Indija, near Belgrade.
Sapir, in collaboration with ARS Altmann, aims to develop the automotive segment in the port of Ravenna
Ravenna
The first train with vehicles destined for South Korea has already arrived.
Maersk continues in its own vertical integration strategy by buying South African Vector Logistics
Maersk continues in its own vertical integration strategy by buying South African Vector Logistics
Copenhagen / Durban
The company has more than 5,600 employees
Naviris ' joint venture, the joint venture Fincantieri-Naval Group, will be renewed.
Genoa / Paris / Rome
Pierroberto Folgiero has been appointed president, Damien Raby CEO
TX Logistik, weekly triangular intermodal service between Romania, Austria, Italy and Germany
Troisdorf / Vienna
Rail Cargo Group transforms the triangular link between Austria and the port of Trieste in two direct trains
All 16 Italian port authorities with Assoports at Seatrade Cruise Global
Fort Lauderdale
In Italy, cruising traffic shows a steady recovery
In 2022 the turnover of the CIMC resulting from the sale of the containers fell by -30.7%
Shenzhen
In the second half of the year alone, the decline was -40.4% percent.
Launched the tender for the infrastructure of the bulk terminal in the Cagliari Port
Cagliari
Amount at auction of more than 19.5 million euros
ESPO urges EU and European governments to lay out funding schemes for the installation of OPS in ports
Brussels
Satisfaction with the preliminary settlement agreement on the infrastructure for alternative fuels
UIRR recalls that it is possible to develop European intermodal transport and the necessary measures have already been suggested
Brussels
The association agreed with the dismal analysis of the European Court of Auditors ' sector.
Agreed on how to install electric charging stations for cars and trucks on the roads of the EU
Brussels
Preliminary agreement between Parliament and Council also for hydrogen filling stations
Nearly 2,000 workers in the Italian shipbuilding industry paid with irregular pay
Venice
Nearly 2,000 workers in the Italian shipbuilding industry paid with irregular pay
This is an income stream of six million euros, not subject to taxation or contribution.
The WSC against the bill that in the USA would repeal antitrust exemptions to foreign shipping companies
Washington
Foreign maritime monopolies-indicted by Costa Costa-have manipulated the maritime transport sector. Butler : misunderstanding how VSA helps supply chain to work better
BRT and the Italian subsidiary of the Geodis have been placed in judicial administration
Milan
A systematic exploitation of several thousand workers would emerge from the investigation.
Carnival realizes the best wave season ever
Carnival realizes the best wave season ever
Miami
New record bookings of cruises in both the North American and European markets
A new historical record of cruising traffic in Italian ports was expected in 2023.
Fort Lauderdale
A new historical record of cruising traffic in Italian ports was expected in 2023.
According to Cemar, passengers will be 12.8 million, with a 37.6% on 2022 and a 9.2% on the 2019
APM Terminals cooperates with Hateco in the realization of the new container terminal in Haiphong
APM Terminals cooperates with Hateco in the realization of the new container terminal in Haiphong
Two million euros for tax evasion in the logistics and home delivery sector
Trieste
Reported 20 entrepreneurs
Austria's Gebrüder Weiss has inaugurated a new logistics terminal in Tyrol
Reutte / Lauterach
It is located in Reutte, near the border between Austria and Germany
Maersk-SIPG agreement for bunkering of green methanol in the port of Shanghai
Shanghai
Expected supply from ship to ship of the new container ships ordered by the Danish company
ESPO, ships should use cold ironing systems in ports, if available, already before 2030
Brussels
Ryckbost : It is hoped that the requirements for ships related to when to use electricity at berth clarify the matter
ECSA, EU agreement on ship fuel gives strong political signal and provides clear climate goals and guidance for industry
Brussels / Rome
Assshipowners, welcome our main instances
T&E, today's EU decision marks the beginning of the end of dirty fuels in the shipping industry
Brussels
The organisation highlighted the need to prevent the agreed standards from presenting loopholes
From Monday to Wednesday a delegation from the EU Parliament will be in Genoa and Florence to make the point about infrastructure
In 2022 the revenues of the terminalist CMPort group in Hong Kong reached a record share
Hong Kong
In 2022 the revenues of the terminalist CMPort group in Hong Kong reached a record share
Port terminals have handled 136.5 million containers (+ 1.1%)
To French CMA CGM the procurement of postal services in Lebanon
To French CMA CGM the procurement of postal services in Lebanon
Beirut
The offer was presented yesterday
After entry into the MSC group, Bolloré Africa Logistics changes name
Puteaux
She was born Africa Global Logistics
AdSP of the West Ligurian Sea, via free to POT and PIAO
Genoa
Updated the fees for the supply of port work in the port of Genoa
The "Oscar of the Ports 2023" award has been given to Roberta Macii
Miami
Recognition to the 23-year career of the AdSP executive of the Northern Tirreno Northern
SAILING LIST
Visual Sailing List
Departure ports
Arrival ports by:
- alphabetical order
- country
- geographical areas
Published the call for tenders for the retraining of the north area of the port of Termini Imerese
Palermo
The work, worth 5.2 million euros, will start in June and will last for eight months.
Tomorrow Costa Cruere will celebrate its 75-year anniversary
Tomorrow Costa Cruere will celebrate its 75-year anniversary
Genoa
On March 31, 1948 parts from Genoa the "Anna C", the first passenger ship of the company
COSCO Shipping Ports's revenues mark new annual and quarterly records
COSCO Shipping Ports's revenues mark new annual and quarterly records
Hong Kong
Last year the business volume of the Chinese company grew by 19.3%
Last year in Greece, 593 ships were subjected to repair work (-0.7%)
Pyreo
Gross tonnage tonnage has increased by 7.3%
Greek Attica bought the ro-ro ship Clementines
Kallithea
Built in 1997, it cost 13.4 million euros
RINA classifies the autonomous ride-hailing workboat of the RC Dock
RINA classifies the autonomous ride-hailing workboat of the RC Dock
Genoa
Delivered the class certificate to the first boat of a fleet that will be able to operate up to 200 miles from the coast
Charity night on board the Fantastic of GNV in support of the Stella Maris
Genoa
It was organized by the National Welfare Committee of the Gente di Mare
Poseidon Acquisition signs the final deal to buy the Atlas Corp.
London
Transaction of the value of approximately 10.9 billion
Guidelines for the safe transport of lithium-ion batteries in containers
Guidelines for the safe transport of lithium-ion batteries in containers
London
They have been published by CINS, International Group of P&I Clubs, ICHCA and TT Club
Strong criticism of the Court of European Accounts to EU policies for the development of intermodal transport
Luxembourg
Values-objective to increase the share of sustainable modes of transport these are termed unrealistic
Thursday in Livorno a workshop on autonomous navigation
Livorno
Event organized as part of the 5G Maritime Autonomous Surface Ship project
In 2022, China's Sinotrans reported record profits despite a -12.5% percent decline in revenue.
Beijing
In 2022, China's Sinotrans reported record profits despite a -12.5% percent decline in revenue.
The reduction of business volume has been generated in the segments of maritime shipments and e-commerce
In 2022, short sea shipping in Spain experienced a slight decline of -0.4% percent.
Madrid
In 2022, short sea shipping in Spain experienced a slight decline of -0.4% percent.
The only international shipping of ro-ro cargoes marked an increase of 8.0% percent (for the first time since the 2016 percent drop in traffic with Italy)
Pimlico Shipping (Brothers Cosulich) buys a revamped
Genoa
The ship, of 7,967 tpl, will be rented to bare boat from the Argo Shipping
Giorgio Bucchioni has passed away, a reference point of breaking and national portions.
Giorgio Bucchioni has passed away, a reference point of breaking and national portions.
The Spezia
Among the institutional assignments, he was Chairman of the Port Authority of Spezia and Confindustria La Spezia
Liberty Lines orders three more monocarena naval vehicles at Spanish shipyard Armon
Belrose
Liberty Lines orders three more monocarena naval vehicles at Spanish shipyard Armon
They will add to the nine already commissioned
Ceremony of laying of the keel of the Silver Ray by Silversea Cruises
Papenburg
The luxury cruise ship is under construction at Meyer Werft
Launched in China the first of two LNG Small Scale & Bunker ships for Fratelli Cosulich
Genoa
Will be taken in delivery in September
The CDA of Interporto Padova unanimously approved the draft budget 2022
Padova
Profit after taxes in line with that of the previous financial year
In Genoa, a centre for the development of new technologies for decarbonisation of shipping has been inaugurated.
Genoa
CapLab will be managed by Ecospray Technologies and the DICCA of the University of Genoa
Collaboration Agreement between the AdSP of the South Tyrreno and Ionian Seas and the University of Calabria
Cowithout
The agreement covers several areas of activity and expertise
In 2022 the transits of trucks through the Swiss Alps decreased by -1.7% percent. Stagnation of rail transport
Bern
In 2022 the transits of trucks through the Swiss Alps decreased by -1.7% percent.  Stagnation of rail transport
Still far away the goal of the transfer of the loads from the road to the rail
In the only fourth quarter of 2022, HHLA Group revenues grew by 4.9%
Hamburg
Operating profit fell by -8.8%
Touax closes 2022 with record revenue
Paris
Expected in 2023 normalization of the container market
PORTS
Italian Ports:
Ancona Genoa Ravenna
Augusta Gioia Tauro Salerno
Bari La Spezia Savona
Brindisi Leghorn Taranto
Cagliari Naples Trapani
Carrara Palermo Trieste
Civitavecchia Piombino Venice
Italian Interports: list World Ports: map
DATABASE
ShipownersShipbuilding and Shiprepairing Yards
ForwardersShip Suppliers
Shipping AgentsTruckers
MEETINGS
Thursday in Livorno a workshop on autonomous navigation
Livorno
Event organized as part of the 5G Maritime Autonomous Surface Ship project
On April 18 Assiterminal will be confronted with politicians and practitioners on the challenges of portugal
Genoa
Meeting at the headquarters of the Federation of the Sea in Rome
››› Meetings File
PRESS REVIEW
Port concession saved Nigeria's economy N3.9tr - Haastrup
(Vanguard)
Can the return of international cruises bolster Japan's beleaguered tourism industry?
(The Japan Times)
››› Press Review File
FORUM of Shipping
and Logistics
Relazione del presidente Daniele Rossi
Napoli, 30 settembre 2020
››› File
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